COVID-19 Has Pushed Millions Of Kenyans Into Poverty

The World Bank says that the economic and social disruptions induced by the COVID-19 pandemic have eroded progress in poverty reduction in Kenya, forcing an estimated 2,000,000 more Kenyans into poverty.

The Kenya Economic Update report indicates that the pandemic and measures to mitigate the spread of the virus are creating multiple challenges for Kenya’s private sector, with severe consequences for household jobs and incomes.

Data analysis from two parallel rapid response surveys conducted by the World Bank and partners confirms that private sector firms are facing lower demand due to reduced consumption and demand for inputs.

The negative impact of COVID-19 on the private sector has also trickled down to household welfare via reduced job opportunities and lower earnings. Unemployment has almost doubled compared to its pre-COVID level.

The World Bank report shows that One in three Kenyan workers are employed by firms facing high risk of temporary or permanent closure and reduced revenues, highlighting the vulnerability of household incomes

Almost 1 in 3 household-run businesses are not operating currently, with revenues decreasing across all sectors. Remittances have fallen, and few households have benefitted from direct cash assistance.

The report also indicates that unemployment has almost doubled compared to its pre-COVID level. Wage workers and especially women who are still employed face a reduction in working hours and earnings

Due to the high poverty levels amongst Kenyans, access to healthcare has also been significantly impeded, with three in 10 households reporting less access to healthcare than before the pandemic.

The report recommends options to be taken to reduce the poverty levels, for firms, supporting the liquidity of viable firms, enhancing firms’ digital capabilities, improving access to information, and improving targeting criteria for interventions to support businesses

For households, the Kenya Economic Update emphasizes the need to secure access to food, while supporting livelihoods through social protection programs to reduce the usage of negative coping strategies compromising assets or food consumption.

According to the report, a well-targeted approach is essential to limit fiscal costs. For example, a targeted cash transfer of 20,000 shillings to poor households would require a budget of 50 billion shillings, equal to the cost of the value-added tax relief enacted by the government.

Such a cash transfer program could reach 2.5 million poor, more than offsetting the increase of poverty by COVID-19. An expansion of the number of beneficiaries is essential as the ‘newly’ poor have different profiles from the current poor.

Youth are also negatively affected by the pandemic, with revenues and profits strongly reduced for micro-enterprises run by young entrepreneurs, with only a few of them making use of government and non-governmental organizations (NGO) support programs.